Life and Health Insurance Exam Comprehensive Flashcards

A complete set of vocabulary flashcards covering life and health insurance concepts, contract rules, legal history, policy types, and critical timeframes for exam preparation.

Risk

Uncertainty of loss.

Peril

Cause of loss.

Hazard

Condition increasing chance of loss.

Physical Hazard

Physical condition increasing risk.

Moral Hazard

Dishonest behavior increasing risk.

Morale Hazard

Carelessness increasing risk.

Pure Risk

Only chance of loss; insurable.

Speculative Risk

Chance of gain or loss; not insurable.

Law of Large Numbers

Larger group = more predictable losses.

Loss Exposure

Potential source of loss.

Homogeneous Exposure Units

Similar risks improve predictability.

Insurance

Transfers risk for premium.

Indemnity

Restores pre-loss position; not applicable to life insurance.

Offer and Acceptance

Required contract element.

Consideration

Premium plus truthful application.

Legal Purpose

Must be legal.

Competent Parties

Must be mentally and legally competent.

Aleatory

Small premium leading to a possible large payout.

Adhesion

Take-it-or-leave-it contract.

Unilateral

Only insurer is legally obligated.

Conditional

Conditions must be met.

Personal Contract

Contract based on the insured.

Valued vs Indemnity

Life insurance is valued; health and property insurance are indemnity.

Warranty

Guaranteed true.

Representation

Believed true.

Waiver

Giving up a legal right.

Estoppel

Cannot reclaim a waived right.

Parol Evidence Rule

Oral statements cannot change a written contract.

Utmost Good Faith

Both parties act honestly.

Paul v Virginia ($1868$)

Supreme Court case ruling that insurance is NOT interstate commerce.

SEUA ($1944$)

Ruling that insurance IS interstate commerce.

McCarran-Ferguson Act ($1945$)

Stated that state regulation is most important.

Financial Services Modernization ($1999$)

Repealed Glass-Steagall.

Agent

Represents the insurer.

Broker

Represents the insured in sales.

Fiduciary

Duty to client and insurer.

Twisting

Misleading replacement.

Rebating

Illegal incentive.

Commingling

Illegal mixing of funds.

E&O Insurance

Protects agents from mistakes.

Buyer's Guide

General explanation of a policy.

Policy Summary

Product-specific details.

Applicant

Requests insurance.

Proposed Insured

Person being insured.

Policyowner

Owns policy rights.

Payor

Pays premium.

Field Underwriter

Agent who gathers risk information.

Trial Application

Application submitted without premium; invitation.

Conditional Receipt

Coverage IF insurable.

Binding Receipt

Immediate temporary coverage.

Adverse Selection

High-risk individuals seeking coverage.

MIB

Medical Information Bureau.

APS

Attending Physician Statement.

Counteroffer

A substandard offer.

Contestability Period

$2$ years.

Suicide Clause

$2$ years.

Free Look

$10$ days standard or $30$ days for mail order.

Backdating

Allowed for a maximum of $6$ months.

Grace Period

$30/31$ days.

Reinstatement

$3-7$ years.

Insurable Interest

Needed at the time of application only.

STOLI

Illegal investor-originated policy (Stranger-Owned Life Insurance).

Per Stirpes

Distribution by bloodline.

Per Capita

Equal distribution.

Absolute Assignment

Full transfer of ownership.

Collateral Assignment

Loan collateral.

Policy Rider

Attachment modifying the policy.

Term Life

Temporary coverage.

Whole Life

Permanent insurance with cash value.

Universal Life

Flexible permanent insurance.

Variable Life

Investment-based insurance.

Decreasing Term

Shrinking death benefit.

Accelerated Benefit Rider

Early access to the death benefit.

Guaranteed Insurability

Permission to buy more insurance without an exam.

Waiver of Premium

Premium waived during disability.

COLA Rider

Inflation-adjusted benefits (Cost of Living Adjustment).

Interest on Proceeds

Taxable.

Cash Value Growth

Tax deferred.

1035 Exchange

Tax free transfer.

Dividends

Not taxable.

7.5\% AGI

Medical deduction threshold.

COBRA

$18/36$ months, $60$-day election, $102\%$ premium.

HIPAA

$63$-day rule; applicable to employers with $20+$ employees.

Bronze Plan

$60/40$ metal plan benefit structure.

Silver Plan

$70/30$ metal plan benefit structure.

Gold Plan

$80/20$ metal plan benefit structure.

Platinum Plan

$90/10$ metal plan benefit structure.

Hospital Indemnity

Pays by days spent in hospital, not by bills.

Critical Illness

Lump sum benefit.

Own Occupation

Cannot do own job.

Any Occupation

Cannot do any job.

Elimination Period

Waiting period before benefits begin.

Probationary Period

Waiting period for sickness benefits.

Presumptive Disability

Disability involving blindness, speech, hearing, or limbs.

Business Overhead Expense

Does NOT cover the owner.

Medicare Part A

Hospital insurance.

Medicare Part B

Medical insurance.

Medicare Part C

Advantage plans.

Medicare Part D

Prescription drugs.

ADLs

Activities of Daily Living; need help with $2$ of $6$ for LTC benefits.